Salary increase in Malaysia to remain stable at 5% — Mercer

This article first appeared in The Edge Financial Daily, on December 6, 2019.
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KUALA LUMPUR: The salary increase across key industries in Malaysia is forecast to remain stable at 5% in 2020, while the inflation rate is projected to rise to 2.4% from 0.9% in 2019, said consulting firm Mercer.

In particular, the shared services and outsourcing (SSO) industry is expected to have the highest salary increase at 5.5%, according to the findings of Mercer’s annual remuneration survey.

In second place are the life sciences and chemical industries, which are expected to see a 5.4% salary growth in 2020.

“The salary trend forecast for 2020 in Malaysia remains stable across job functions as well. The top three job functions with the highest salary increase are production and skilled trades (5.8%), data analytics/warehousing (5.5%), and IT (information technology) and project managers (5.3%),” Mercer said. Conversely, administration and secretarial jobs are predicted to receive the lowest salary increment at 4%, it added.

As for career streams, the survey showed that paraprofessionals can expect a salary increase of 5.3%, whereas executives can expect a 4% rise.

Mercer Malaysia chief executive officer Prashant Chadha said well-performing companies and industries may be more incentivised to pay salaries higher than the market average.  

“It is no surprise we are seeing high salary increase forecast from industries including SSO as they benefit from the government’s push for industry disruption and digitisation. “Similarly, high demand for some jobs may lead to larger salary increases to attract and retain talent,” he said.

Chadha said that in today’s age of automation, besides just compensation, it is imperative for organisations to also focus on upskilling their workforce.

“The recent 2020 budget announcement by the government to allocate funds for the development of a digitally competent workforce will bring about positive impact,” he said.

Other findings include that among the industries surveyed the voluntary attrition rate for workers stood at 6.5% for the first half of the year (1H19).

Specifically, the consumer goods industry saw the highest voluntary turnover rate of 15.3% in 1H19, from the 8.4% registered in 2018. This was on account of the implementation of the sales and services tax among other factors.

On the other hand, the chemical industry saw the lowest attrition rate of 4.1% in 1H19. This, combined with a high 2020 salary increment of 5.4%, indicates healthy employee engagement and retention rates.

Within Asia, Mercer found that the top three reasons for employees leaving their employment are competitive pay, manager interaction and a clear career path and job security.